Q3: Union Bank Posts N13.3bn Profit, Grows Shareholders’ Funds to N286bn

Goddy Egene

Union Bank of Nigeria Plc has recorded gross earnings of N109.5 billion for the nine months ended September 30, 2017, showing an increase of 16 per cent above N94.8 billion posted in the corresponding period of 2016.

However, profit before tax (PBT) fell marginally by two per cent from N13.3 billion to N13 billion, while  customer deposits improved 17 per cent to N767.9 billion, up from N658.4 billion in 2016.

Details of the results showed that the bank grew its shareholders’ funds to N285.6 billion, up from N71.7 billion.  A customer-centric product suite, a revamped digital platform and the launch of a new advertising campaign have delivered 63 per cent year-to-date increase in new-to-bank customers in 2017.

Net interest income rose 16 per cent from N35.2 billion to N40.9 billion, while impairment charges fell by 53 per cent to N6.0 billion, from N1.9 billion in 2016.
Commenting on the results for the nine month period, Chief Executive Officer of Union Bank, Emeka Emuwa, said:

“We remain encouraged by the results of our customer acquisition strategy, as customers continue to respond to our targeted market offerings and increased brand awareness, following the debut of a new advertising campaign to support the launch of Union Bank’s new digital platform, including our revamped mobile banking app and *826#, our SMS banking platform.  However, a challenging macro-operating environment, characterised by double-digit inflation, continues to create headwinds for businesses, constrict consumer purchasing power and pressure operating expenses as well as portfolio quality. Consequently, core pre-tax earnings for the period were marginally lower at N13 billion compared to N13.3 billion in 9M 2016.”

According to him, with the N50 billion capital raise underway, “we remain focused on our strategic priorities and expect this new capital to deliver the momentum needed to accelerate the pace of our business growth.”

Speaking in the same vein,   Chief Financial Officer, Oyinkan Adewale said:“The Group’s net interest income after impairments improved significantly by 16 per cent from N35.2 billion to N40.9 billion compared to the period ended 30 September 2016. Non-interest income is down by six compared to 9M 2016, which included one-time revaluation gains.  With our continued focus on early problem recognition and prudent provisioning, our coverage ratio has strengthened to 203 per cent as at 30 September 2017, from 182 per cent as at December 2016.”

He explained that the impact of naira devaluation, coupled with the inflationary environment, has pressured the bank’s  cost-to-income ratio, especially as  it  continues  to make investments in technology critical to long-term business strategy.

“We are confident that these investments will deliver the expected cost benefits in the medium term. We also expect improved capital adequacy and higher revenues, fuelled by N50 billion of new capital.